The shrinking pie: The end of “development”?

This article is the part 7 from Chapter 5 of Richard Heinberg's new book 'The End of Growth', which is set for publication by New Society Publishers in August 2011. This chapter 'Shrinking Pie: Competition and Relative Growth in a Finite World' looks in greater depth at the prospects for further development in in an increasingly resource strained environment.

Throughout the past two centuries economic growth has translated to an increased capability to support more humans with Earth’s available resources. More energy, more raw materials, more jobs, more trade, better sanitation, and key medical advances have all contributed to higher infant survival rates and longer life expectancy in general. Human population growth can be seen as an indication of our success as a species.[1]

But now, as economic growth ends, higher population levels pose an enormous vulnerability. Declining energy, declining minerals and fresh water, and reduced global trade will challenge our ability to maintain existing food and public health systems, perhaps even in currently wealthy countries.

August Comte, the 19th century French sociologist, famously declared that, “demography is destiny.” During the coming post-growth decades, the nations of the world will face somewhat differing challenges depending on their size of population, rates of population growth, median age, and degree of urbanization.

Countries with large, youthful, and growing urban populations will be hardest hit. Young people will face lack of economic opportunity as trade contracts. Also, countries with young populations will see continuing population growth even if efforts are undertaken now to rein in fertility, simply because the bulk of the population will be in the child-bearing age range for the next two or three decades.

Countries with stable or declining populations (this includes most western European nations) will see aging populations, and thus a declining proportion of the population will consist of youthful workers (as we saw in the case of China). Some economists see this as a serious problem, and as a result Germany is offering cashfinancial incentives for couples to reproduce. However, this merely puts off inevitable process of adjustment to the end of population growth.

The end of economic growth will pose demographic challenges to all societies. But having more people will result in a bigger challenge than having fewer.

In a low-income society, when people have many children they tend to spend whatever money they have on keeping those children fed, so there is little left over to invest in future economic productivity (including education for children). This is a situation that tends to lead to continuing poverty. If there is no surplus income, there is nothing for the government to tax, so governments don’t expand infrastructure: they don’t build roads to rural areas so farmers can get their product to market—or water treatment facilities, or electricity grids, or schools. If farmers can’t get their products to market, they may eventually give up and move to the cities where they strain whatever support infrastructure does exist. One of the best hopes for a society in this kind of bind is to reduce fertility.

Since World War II, eight countries (Tunisia, Japan, South Korea, Singapore, Taiwan, Barbados, Hong Kong, and Bahamas) have achieved the shift from being listed as “developing” to “developed” by first bringing fertility down through strong family planning programs. Once fewer children were being born, families found that they had money left over after paying for basic necessities, and this led to capital formation through personal savings. Demographers call this the “demographic dividend.”

The continent of Africa will probably encounter the worst demographic challenges of any region in the decades ahead. Its population is expected to double its numbers by 2050, according to the UN. By then, Africa’s urban population may have tripled, with 1.3 billion living in cities. These trends of rapid population growth and rapid urbanization cannot be sustained in a world of declining energy, scarce water, and changing climate, and will soon become enormous liabilities as today’s quickly growing slums turn into centers of even greater human misery.

South Asia will also encounter enormous problems. Especially vulnerable is Pakistan, whose rapid population growth is already undermining access to education and medical facilities while posing serious health problems for women.[2]

The U.S. has the fastest growing population of any industrialized country—mostly due to immigration (though immigration rates have declined in the last couple of years, probably due to the economic crisis). Already a hot-button issue, immigration could become even more of one as the economy contracts. But further waves of immigrants are possible if Mexico’s economy fails due to declining revenues from oil production.

Further declines in the U.S. economy will shift public opinion toward wanting to restrict immigration and population growth. Every survey since the 1940s has shown that a majority of Americans favors reducing immigration, yet during that time legal immigration has quadrupled (it doubled during Bush I and again during Bush II). Much of the support for liberalizing immigration policy has come from the Democratic party (in its calculus, more immigrants mean more Democrats), as well as from the construction industry (more immigrants equal more housing starts), the food industry (which depends on low-paid seasonal farm workers), and the U.S. Chamber of Commerce (immigrants reduce labor costs).

Sadly, the debate has failed to take account of one key question: What is the population level the U.S. can sustain? By most accounts, the country is already overdrawing resources, so that future generations will have restricted access to fresh water, fertile soil, and useful minerals. Adding more people through immigration simply steals further from our grandchildren. Gains in the efficiency with which resources are used may help temporarily, but population growth erases those gains over the long run.

For all nations, immigration laws need to be based on reasonable targets based in turn on estimates of human carrying capacity. Those laws must deal humanely with extreme circumstances, including provisions for refugees—such as climate refugees, whose numbers will likely multiply dramatically in the years ahead.

Meanwhile, declining economic growth will probably lead to increased demographic competition between the old (who will be seen by the young to have used up the world’s resources) and the young (who will be seen by the old as a threat to savings and economic stability).

In the U.S., this competition may already be taking political form through the Tea Party movement, whose main agenda is to end government borrowing, bailouts, and stimulus packages, and to cap the national debt. These priorities are attractive to older, wealthier citizens who are concerned about protecting their savings from inflation—which would tend to benefit younger people saddled with debt.[3] Meanwhile, younger citizens are unhappy looking toward a future in which college and home ownership are no longer affordable and few jobs are available.

The population problem is solvable by making family planning and contraception freely available, changing cultural norms (as is being done by Population Media Center), and advancing women’s rights.[4] But consider a best-case scenario: In a dozen years, given proper funding, virtually all countries could achieve a replacement level of fertility. Still, even after that monumental accomplishment, it would be another 70 years before the world as a whole would achieve zero population growth or begin a controlled decline.

The population issue has been highly politicized, and those who argue for controls on population growth are often demonized as elitist, racist, or misogynist. This is tragic, because the ongoing debate has caused humanity to put off dealing with the problem for far too long. And it is the poor, and especially poor women and children, who will pay the price for this delay.

The End of “Development”?

For decades agencies that either actually or ostensibly aimed to aid impoverished nations have employed the terms “developed,” “developing,” and “underdeveloped” to refer to countries at various stages of industrialization. In ordinary usage, the word develop often means “to progress from an embryonic to an adult form”; thus its application to processes of economic and social change has conveyed an implicit assumption of inevitability. By calling rich industrialized countries “developed” and poor non-industrial countries “underdeveloped,” policy makers were in effect saying that industrialization is equivalent to the healthy biological process of maturation, and should be the goal of all human societies. Through a trade-led process of economic expansion, non-industrial countries with subsistence economies and large indigenous populations must aim to become urbanized, consumer-driven, cosmopolitan manufacturing centers (according to this view): it is their right and destiny to do so.

This set of assumptions was always questionable. Indeed, it has been attacked with some vigor by Vandana Shiva, Helena Norberg-Hodge, Martin Kohr, Jerry Mander, Doug Tompkins, Gustavo Esteva, Edward Goldsmith, Ivan Illich, Manfred Max-Neef, David Graeber, and other prominent development critics (sometimes also known as post-development theorists).[5]

The critics of development claimed that the project of using loans and aid packages to fund huge infrastructure projects in poor nations, or to build factories there for multinational corporations, was at its core merely a continuation of colonialism by other means. Since two-thirds of the world’s nations were defined as “underdeveloped,” this meant that people in most countries needed to look outside of their own cultures for economic, agricultural, and educational models. Poor Third World nations were encouraged to take on enormous amounts of debt, and to flush young people out of the countryside and into cities. All of this came at both a human and an environmental cost.

Development, according to the critics, was actually a euphemism for post-war American hegemony; and indeed it was the U.S. (along with its European allies) that provided the loans, trade rules, educational templates, and media images that would reshape societies across the global south.

Two books galvanized anti-globalization activism and epitomized the arguments of development critics: Ancient Futures (1991) by Helena Norberg-Hodge, and Confessions of an Economic Hit Man (2005) by John Perkins.[6]

As a graduate student in linguistics in the 1970s, Norberg-Hodge had chosen to do field work in Ladakh, a remote Buddhist region in northern India. She found there a traditional village-based society virtually untouched by the modern Western world. The people had their problems, as people everywhere do, but the culture had evolved to suit its ecological constraints and opportunities; most people seemed generally happy, helpful, and friendly. Norberg-Hodge has continued her work in Ladakh up to the present, documenting how development has uprooted families, upended cultural norms, turned self-sufficiency into dependency, and created more misery than satisfaction.

John Perkins, a former chief economist at a Boston-based strategic consulting firm, claims he was groomed in the 1970s as an “economic hit man,” in which capacity he helped needlessly to plunge poor nations like Indonesia and Panama into debt. Perkins tells how he used purposefully over-optimistic economic projections to persuade foreign governments to accept billions of dollars in loans from the World Bank and other institutions in order to build dams, airports, electric grids, and other infrastructure that he knew they couldn’t afford and didn’t need. Construction and engineering contracts were routed to U.S. companies, with bribes to top foreign officials smoothing the way. However, the resulting debts ultimately had to be shouldered by the taxpayers in the poor countries. When payments couldn’t be made, the World Bank or International Monetary Fund would jet in a team of economists to dictate the country’s budget and security agreements. Perkins contends that this all amounted to a clever way for the U.S. to expand its global influence at the expense of citizens in poor, often largely indigenous nations.

The defenders of development have always maintained that such claims are either fabricated or overblown, and that the real purpose of loans and aid packages has been to raise the standard of living of people in the world’s poorest countries. Statistics lend support to this view. The recent 2010 UN Human Development Report concludes that people in poor nations are generally healthier, wealthier, and better educated than they were 40 years ago.[7] Surveying human progress in 135 countries—92 percent of the world’s population—the report shows that average life expectancy rose from 59 to 70 years, primary school enrolment grew from 55 to 70 percent, and per capita income doubled to more than $10,000. The report’s authors do devote a section to discussion of the “weak association between [GDP] growth and quality of life indicators such as health, education, political freedom, conflict and inequality,” and also note that, “Within countries rising income inequality is the norm.”

Development critics place significant emphasis on these latter points. It is relatively easy to measure GDP; it is more difficult to quantitatively assess the integrity of families and communities. Also, much of the measured “progress” of the past few decades has occurred in a few rapidly industrializing nations, while many very poor countries have actually lost ground in terms of most citizens’ access to food, water, and shelter. Averages and totals can obscure important and worrisome details.

The discussion about development’s efficacy was important during the heyday of economic expansion. However, now that growth is ending, the goal of conventional economic development—whether or not it ever made sense from humanitarian and environmental points of view—may have become largely unachievable.[8]

Without cheap transport fuel, the advantages of globalization begin to disappear, as we saw in Chapter 4. Scarce and expensive petroleum also undermines the project of industrializing agriculture and makes highway construction nonsensical. And the global credit crisis spells an end to big loans for unneeded infrastructure projects.

The priorities of poor nations have just changed. From here on, competing in the global economy will recede in importance; the primary challenge will be to adapt to post-growth world economic conditions and ever-worsening environmental challenges.

The UN Human Development Report does not address the resilience of societies in the face of declining global energy resources, the rising scale environmental disasters, or the end of economic growth (only the potential impacts of climate change are mentioned, though not taken fully into account). But in the decades ahead resilience will count for far more than economic competitiveness.

Urbanization, the industrialization of food systems, and the building of highways may have contributed to GDP over the short term, but they have created societal vulnerability over the longer term. In a world of Peak Oil, scarce fresh water, unstable currencies, changing climate, and declining trade, true “development” may require implementation of policies at odds with—sometimes the very reverse of—those of recent decades.

The phrase “sustainable development” entered the development lexicon in the late 1980s with the publication of the Report of the Brundtland Commission (the World Commission on Environment and Development); it was defined as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” While this ideal has often been watered down in the process of implementation, if taken seriously it could help poor nations identify sound strategies for dealing with the end of growth.

All the world’s nations need to continue solving basic human problems (i.e., providing food, education, health care, and security) in the face of global environmental and economic change, without drawing down Earth’s nonrenewable resources or saddling future generations with onerous debt. And they have to do this in a way that protects fragile ecosystems—including forests, river systems, soils, and ocean fisheries—while, if possible, restoring them.

Nations whose subsistence farmers still form a significant proportion of the over-all population, though in recent decades termed “underdeveloped,” may in fact have some advantages in the post-growth world. Rather than continuing with ruinous attempts to install fuel-guzzling food and transport systems, these countries should be adopting the “appropriate” or “intermediate” technologies that have been advocated for several decades by E. F. Schumacher and others. Appropriate technology (or AT) is typically labor- and knowledge-intensive rather than capital-, resource-, and energy-intensive. Examples include the use of local natural materials for building, the small-scale generation of local power from methane digesters, and the purification of water in households with porous ceramic filters.

People in currently wealthy nations may well find themselves adopting similar technological strategies in the decades ahead. In the process, there may be a substantial reversal of the trend, seen since the beginning of the Industrial Revolution, toward greater wealth inequality among nations.

5. See for example Robin Broad and John Cavanagh, Development Redefined: How the Market Met Its Match ( Boulder, CO: Paradigm Publishers, August 2008); Edward Goldsmith et al., The Future of Progress: Reflections on Environment and Development (Totnes, Devon: Green Books, 1995).

Richard Heinberg is the author of eleven books including 'The Party's Over', 'The End of Growth', and 'Snake Oil'. He is Senior Fellow-in-Residence of Post Carbon Institute and is widely regarded as one of the …

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